All You Need To Know Going Into Trade On Jan. 23
Asian stocks followed their U.S. counterparts lower as rising pessimism that trade tensions with China will persist helped send technology and multinational companies tumbling.
Japanese and Australian shares slipped and futures in Hong Kong pointed to losses after all major U.S. benchmarks declined. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, parred losses and traded a little changed at 10,933 as of 7:10 a.m.
Short on time? well, then listen to this podcast for a quick summary of the article!
Here’s a quick look at all that could influence equities today.
U.S. Market Check
- Stocks fell the most in almost three weeks as rising pessimism that trade tensions with China will persist helped send technology and multinational companies tumbling.
- The yield on 10-year Treasuries steadied after sinking five basis points to 2.74 percent.
- Japan’s Topix Index fell 0.7 percent.
- S&P/ASX 200 fell 0.2 percent.
- S&P 500 futures were little changed.
- Brent crude halted a two-day rally, ended 1.98 percent lower at $61.50 per barrel.
- West Texas Intermediate crude declined 0.4 percent to $52.80 a barrel.
- Gold rose 0.7 percent to $1,285 an ounce.
London Metal Exchange
- Aluminium ended 1.67 percent higher.
- Tin halted a three-day rally, down 1.09 percent.
- Nickel ended lower for the second day, down 1.82 percent.
- Lead ended higher for the third day, up 0.35 percent.
- Zinc halted a four-day rally, down 0.46 percent.
- Copper ended lower for the second day, down 0.77 percent.
Key Events To Watch This Week
- There are monetary-policy decisions for the Bank of Japan (Wednesday), the Bank of Korea and the European Central Bank (both Thursday).
Stocks To Watch
- Reliance Industries received Competition Commission of India’s nod for acquisition of stake in Den Networks and Hathway.
- Infosys’ arm EdgeVerve Systems launched an automation tool for enterprises.
- Cyient said it was increasing its stake in its arm ‘Cyient DLM’ from 74 percent to 100 percent for a consideration of Rs 42.5 crore.
- VA Tech Wabag secured desalinisation order worth Rs 467 crore from Mangalore Refinery and Petrochem towards construction of a 30 MLD Sea Water Desalination plant expandable up to 70 MLD in Karnataka.
- Jharkhand Bijli Vitran Nigam cancelled contract with IL&FS Engineering & Construction Company over electrification works projects citing slow progress and failure of the project in Jharkhand.
- IRB Infra Developers arm’s HAM project received appointed date from NHAI for Vadodara-Mumbai Expressway, with cash outlay of Rs 2043 crore.
- Maharashtra Seamless said it will acquire 100 percent stake in United Seamless Tabulaar for Rs 477 crore. For this arrangement the company had received NCLT nod on Jan. 21.
- Walchandnagar Industries entered into an agreement with ISRO to manufacture component for the Polar Satellite Launch Vehicle Program for Rs 96 crore ( with an escalation clause) for the next three years.
- Godwari Power and Ispat, on the scheme of amalgamation of company with Jagdamba Power & Alloys, the latter’s shareholders disapproved the scheme as the exchange ratio was arrived at Rs 508 per share citing price fall of the share prices thereby making the transaction unviable.
- Prabhat Dairy reiterated that it intends to share a substantial portion of the proceeds from the sale with shareholders after meeting tax and transaction costs. It says it is evaluating all potential options available to return capital to shareholders in the most optimal manner. The proceeds being referred considers those receivable by the company and its subsidiary Cheese Land Agro (India) Pvt. Ltd.
Nifty Earnings To Watch
- Bharti Infratel
Other Earnings To Watch
- Bank of Maharashtra
- Can Fin Homes
- DB Corp
- Dishman Carbogen Amcis
- Essel Propack
- Everest Industries
- Hathway Cable & Datacom
- Indoco Remedies
- InterGlobe Aviation
- JM Financial
- Kirloskar Pneumatic
- Mafatlal Finance
- Navin Fluorine
- Orient Paper & Industries
- Pidilite Industries
- Premier Explosives
- Radico Khaitan
- Reliance Communications
- Sintex Plastics Technology
- Tejas Networks
- Thirumalai Chemicals
Ujjivan Financial Services
- United Spirits
- Vijaya Bank
- Wendt (India)
- Tanla Solutions
- Shree Digvijay Cement
- Rajratan Global Wire
- Oriental Hotels
Earnings Reaction To Watch
HDFC Standard Life Insurance (Q3, YoY)
- Net Premium Income up 27 percent at Rs 6,897.7 crore.
- Net profit up 18.5 percent at Rs 245.6 crore.
- AUM up 13 percent at Rs 1.17 lakh crore.
- New business premium up 41 percent at Rs 9,940 crore.
ICICI Pru Life Insurance (Q3, YoY)
- Net premium income up 27 percent at Rs 7,483 crore.
- Net profit down 34 percent at Rs 296.8 crore.
- AUM up 8.44 percent at Rs 1.49 lakh crore.
- New business premium up 18.6 percent at Rs 910 crore.
Oberoi Realty (Q3, YoY)
- Revenue up 48.4 percent at Rs 528.6 crore.
- Net profit up 14.7 percent at Rs 137.9 crore.
- Ebitda down 2.3 percent at Rs 188.1 crore.
- Margin at 35.6 percent versus 54.1 percent.
- Operating costs up 26 percent at Rs 353.7 crore.
Sadhana Nitrochem (Q3, YoY)
- Revenue up 2.6 times at Rs 70.3 crore.
- Net profit up 3.4 times at Rs 27.3 crore.
- Ebitda up 3.4 times at Rs 33.6 crore.
- Margin at 47.8 percent versus 37.2 percent.
- Colourformer capacity to be expanded by 250 MTPA in Q4.
Genus Power Infra (Q3 Standalone, YoY)
- Revenue up 45.9 percent at Rs 292.1 crore.
- Net profit up 74.2 percent at Rs 23 crore.
- Ebitda up 90.5 percent at Rs 38.3 crore.
- Margin at 13.1 percent versus 10 percent.
Syngene International (Q3, YoY)
- Revenue up 20.5 percent at Rs 467.1 crore.
- Net profit up 6.1 percent at Rs 87 crore.
- Ebitda up 26.1 percent at Rs 140.2 crore.
- Margin at 30 percent versus 28.7 percent.
Confidence Petroleum (Q3, QoQ)
- Revenue up 15.3 percent at Rs 283 crore.
- Net profit up 14.8 percent at Rs 18.6 crore.
- Ebitda up 15.79 percent at Rs 35.3 crore.
- Margin at 12.5 percent versus 12.4 percent.
Agro Tech Foods (Q3, YoY)
- Revenue flat at Rs 215.3 crore versus Rs 214.6 crore.
- Net profit up 11.1 percent at Rs 10 crore.
- Ebitda flat at Rs 17.9 crore.
- Margin unchanged at 8.3 percent.
- Page Industries: Nalanda India Fund sold 1.85 lakh shares or 1.66 percent equity at Rs 22,161.05 per share.
- Prabhat Dairy: Alquity Sicav - Alquity Indian Subcontinent Fund sold 16 lakh shares or 1.64 percent equity at Rs 86.56 each.
Kewal Kiran Clothing
- SBI Mutual Fund acquired 2.95 lakh shares or 2.4 percent equity at Rs 1,100 per share.
- Nalanda India Fund sold 3 lakh shares or 2.43 percent equity at Rs 1.100.02 per share.
- Vivimed Labs price band revised to 10 percent.
Who’s Meeting Whom
- Tata Steel to meet Tata MF, HDFC MF and other investors on Jan.23.
- Rico Auto promoters acquired 36,100 shares from Jan. 18-21.
- Tourism Finance Corporation of India promoter LIC sold 1 lakh shares from Jan. 19-21.
- Eros International promoter Eros Worldwide FZ acquired 75,000 shares on Jan. 22.
(As reported on Jan. 22)
Money Market Update
- The rupee on Tuesday was at its lowest since Dec. 17 after weakening for the third straight day to close at at 71.44/$. It closed at 71.28/$ on Monday.
- Nifty January futures closed trading at 10,936, premium of 13 points.
- Max open interest for January series at 11,000 strike value call (open interest at 33.8 lakh shares).
- Max open interest for January series at 10,500 strike value put (open interest at 33.5 lakh shares).
Stocks In F&O Ban
- Adani Power
- Jet Airways
- Nifty PCR at 1.53 versus 1.59.
- Nifty Bank PCR at 1.13 versus 1.18.
On Asian Paints
- Upgraded to ‘Outperform’ from ‘Neutral’; hiked price target to Rs 1,580 from Rs 1,180.
- Volume growth picks up significantly; volume growth outlook has improved.
- Recent price increases with falling input costs will improve margins.
- Raise FY19-21 EPS estimates by 7-16 percent; full effect of lower GST rates yet to play out.
- Maintained ‘Outperform’ with a price target of Rs 1,565.
- December quarter results were ahead of estimates; Strong 22 percent volume growth.
- Management’s outlook on demand was fairly cautious which is surprise in the context of strong performance.
- Volatility in crude prices as well as rupee is a concern.
On TVS Motor
- Maintained ‘Sell’ with a price target of Rs 360.
- Good growth in December quarter, but was in line with estimates.
- Two wheeler demand concerns; TVS better in scooter/premium-bikes but mopeds a drag.
- Margin expansion unlikely amidst regulatory cost push and high competition.
- Maintained ‘Underperform’ with a price target of Rs 450.
- Strong average selling price drives better-than-expected performance.
- Challenges related to costs and safety and emission regulations lie ahead.
- Maintain Underperform given rich valuations.
On Havells India
- Maintained ‘Outperform’; hiked price target to Rs 775 from Rs 720.
- Revenue growth surprises across categories.
- Input costs impact consumer durables and Lloyd’s margins.
- Large channel inventory in the AC industry remains a concern.
- Maintained ‘Outperform’; hiked price target to Rs 842 from Rs 695.
- Strongest revenue growth in core portfolio in 6.5 years driven by volume growth.
- Operating margins to recover as company is taking price hikes.
- Higher working capital not a concern; Lloyd business to watch out for in the March quarter.
On Shree Cement
- Maintained ‘Outperform’ with a price target of Rs 19,050.
- Strong volumes offset cost headwinds.
- Cost deflation to benefit from March Quarter, price hike can drive upgrades.
- Capacity growth to drive market-share gain in the next two financial years.
- Maintained ‘Outperform’ with a price target of Rs 18,275.
- Operating income beats estimates led by cement realisations and power units and margins.
- Unit operating margin and Power Ebitda was at multi-quarter high.
- Sustained increase in cement prices is the key to stock-price performance.
On HDFC Life
- Maintained ‘Buy’; cut price target to Rs 475 from Rs 510.
- Steady premium growth but with weaker persistency and margins.
- Steady credit protect business aids growth and profitability.
- Lower growth and margin forecasts driving 4-9 percent cuts to VNB forecasts for FY20-21.
- Maintained ‘Neutral’ with a price target of Rs 400.
- VNB margins fell due to seasonality and transient factors.
- Protection uptick robust, a millennial growth story awaits.
- Valuation leave limited upside; await better entry points.
On ICICI Prudential
- Maintained ‘Outperform’ with a price target of Rs 415.
- Weighed down by capital market volatility.
- Sharp decline in VNB margins as operating leverage benefits reverse.
- ICICI Pru is a deeply cyclical stock; opportunity to accumulate.
- Maintained ‘Buy’; cut price target to Rs 430 from Rs 450.
- December quarter review: weaker capital market flow, lower persistency and margins.
- ULIP dependence drags down premium growth.
- Persistency weakens and hurts margin but strong protection growth.
- Emkay on Prabhat Dairy
- Suspending Coverage given exit from its core business.
- Sale of dairy business appears to be negative for minority shareholders.
Emkay on Reliance Nippon
- Maintained ‘Buy’; cut price target to Rs 192 from Rs 204.
- Weak AUM growth drags earnings down.
- Cut revenue estimates by 8 percent and 14 percent for the next two financial years respectively, resulting in an earnings decline of 10.8 percent and 8.1 percent respectively.
- Trail expense cost burden would be shared with distributors – average should be 60 percent.
SBICAP on Aviation
- Domestic air passenger traffic growth continued to moderate in December from earlier highs.
- In strongest quarter of the year, passenger growth has been dragged down to 12 percent.
- There has been attempt to increase fares which is an encouraging sign.
- Even as yields improve, decline in PLFs and elevated ATF prices will keep profitability muted.